New York Markets After Hours

Dow snaps four-session losing streak

Nasdaq gains on chip strength; oil at 13-year high

By

MarkCotton

NEW YORK (CBS.MW) -- U.S. stocks ended higher Tuesday as the Dow Jones Industrial Average snapped a four-session losing streak on gains for Intel, Disney and ExxonMobil, while semiconductor shares led a broad-based rally in the technology sector.

The bounce-back in equities came as crude oil prices closed above $40 a barrel for the first time since October 1990, a 13-year high. See full story.

The Dow
DJIA, -0.05%
was up 29.45 points, or 0.3 percent at 10,019.47, ending a four-session decline that saw the index shed over 300 points, and climbing back over the psychologically key 10,000 mark. Twenty out of 30 Dow stocks moved higher.

The Nasdaq Composite
$COMPQ
rose 35.28 points, or 1.9 percent, to 1,931.35, just a fraction off its intraday high.

Joe Kalinowski, director of research at Puglisi & Co., did not put much store by Tuesday's gains because they came in light volume.

"We had a couple of down days on pretty high volume and then to see such a weak snapback on such light volume doesn't usually show a healthy market," said Kalinowski.

Kalinowski said interest rate fears and the higher price of oil are weighing but more importantly, "there is not a lot of conviction."

"People are probably going to wait and see for more solid evidence that the market is turning."

Early strength in the market came on the back of an overseas rebound, with Japan's Nikkei Average snapping a six-session losing streak and Europe's main indexes recouping some of Monday's pullback.

In a reversal from the prior session's activity, advancers outpaced decliners by a 27 to 6 score on the New York Stock Exchange, and by a 22 to 9 ratio on the Nasdaq.

Volume was 1.5 billion on the NYSE, and 1.6 billion on the Nasdaq.

On a sector-by-sector basis, airlines bounced back strongly, with the Amex Airline Index ($XAL) climbing as much as 3.6 percent on hopes of improving passenger traffic. Optimism stemmed from strong April traffic numbers from recently merged Air France and KLM Dutch airlines. Meanwhile, British Airways
BAB, -0.07%
said it would be passing along higher energy prices to customers with surcharges starting on Thursday, raising hopes U.S airlines could do the same.

Other sectors moving higher include telecom as well as Internet and networking shares. Bank also rebounded from the prior session weakness.

Faring less well were traditionally defensive sectors such as drug stocks and utilities. The Amex Pharmaceutical Index
$DRG
was down 0.3 percent and the Philadelphia Utility Index dropped 0.3 percent.

On the Dow, Walt Disney Co.
DIS, -0.94%
was one of the biggest percentage gainers, up 4 percent after UBS upgraded the media giant. An upgrade from A.G. Edwards also helped ExxonMobil
XOM, -0.11%
which gained 2 percent.

Altria Group
MO, +1.14%
slipped 2.7 percent, making it the biggest Dow decliner after a Goldman Sachs research note highlighted the negative impact of an anticipated charge related to a cigarette-smuggling settlement expected with the European Commission.

Currencies, gold, bonds

On the currency markets, the dollar gave back some of its recent gains against the euro and the Japanese yen, but the outlook for the greenback remains bright, according to analysts at Mellon Foreign Exchange.

"The threat of cheap U.S. money coming to an end will continue to be a support for the U.S. dollar from a repositioning perspective, given the prospect of money coming back into the U.S. dollar from other investments (such as emerging markets, Japanese equities, commodity-related currencies) that are now under threat."

The euro was up 0.3 percent at $1.1862, after falling as low as $1.1788 overnight. The dollar slipped 0.6 percent against the Japanese yen to 113.81, after climbing sharply Monday.

The British pound fell to nearly a five-month low of $1.7534 after a weaker-than-expected manufacturing report lowered the odds of further near-term rate hikes from the Bank of England. Sterling was last down 1.1 percent at $1.7541.

Elsewhere, gold for June delivery fell $1.50 to close at $377.20 per ounce, its lowest closing level since late October. See full story.

The bond market got some relief when Chicago Fed President Michael Moskow said he's not worried about inflation. His remarks, coupled with a speech from Philadelphia Fed President Anthony Santomero, hinted at a gradual approach to interest-rate increases from the central bank.

Oil closes at 13-year high

Finally, crude futures closed above $40 a barrel on the New York Mercantile Exchange, the first close above that level in over 13 years.

"Oil showed incredible rebound strength today, basically brushing off more OPEC promises which have often been hollow in the past," said Kevin Kerr, editor of newsletter Kwest Market Edge. He sees $41.25 as the next resistance level. See full story.

Stocks in focus

Disney's shares jumped after the UBS upgrade to "buy" from "neutral," with the brokerage citing valuation as well as growth expectations.

ExxonMobil gained as analyst Bruce Lanni at A.G. Edwards upgraded the company to "buy" from "hold," citing the oil giant's earnings consistency, high returns on capital and a strong asset base and balance sheet.

Shares of Altria fell after Goldman Sachs said the company sees a charge of about 11 cents per share in 2004 from its smuggling settlement along with a tax-related gain of 4 cents.

This disclosure, made in a Form 10-Q filed for the first quarter that wasn't immediately available, caused Altria to lower its net earnings estimate to between $4.50 and $4.60 per share, down from its prior outlook of $4.57 to $4.67 per share.

In other broker action, Wachovia Securities raised its rating on Symbol Technologies
SBL, -6.04%
saying the company appears to be gaining market share from rival Intermec. Also overnight, Robert W. Baird upgraded the stock, which soared 14.9 percent to $14.08.

Cisco gains ahead of results

Shares of Cisco Systems
CSCO, +0.12%
climbed 2.9 percent to $22.25 ahead of the technology bellwether's fiscal third quarter results, which came out after the bell.

The networking giant reported fiscal third-quarter net income of $1.2 billion, or 17 cents a share, on revenue of $5.6 billion. During the same quarter last year, Cisco earned $987 million, or 14 cents a share, on sales of $4.62 billion.

Excluding charges, Cisco earned 19 cents a share, a penny better than most analysts expected. The consensus sales target was $5.55 billion, according to Thomson First Call. See full story.

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